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Home building forecast casts cloud over NYC

September 26, 2012

The Real Estate Board of New York recently analyzed new housing permit data for all types of housing (multi-family housing and single family homes) from the U.S. Census over the last several decades (1960-2000).

Based on our analysis of these housing permit numbers, New York City new residential construction is moving at a pace that would make (2010-2019) one of the worst decades for new housing over the last 60 years.

The first two years in the current decade, the city issued new housing permits for only 15,663 units. At this pace, the decade total will be 78,315 new housing units, the lowest decade total since the 1990s.

From 2000-2009, we saw a boom in new housing construction and NYC issued permits for 231,228 new housing units. This is the second highest total in the last 50 years.

The 1960’s saw NYC issue permits for 368,700 new housing units, 60 percent more than the total for the 2000s. While from the 1970s through the 1990s, permits for new housing units declined steadily and dramatically to a decade low in the 1990s of 70,204 units.

There is a lot of risk in estimating what will happen to new housing production based on just two years of actual data. However, there is nothing on the horizon--such as easy access to capital for new projects--that suggests a bump up in housing creation any time soon. In addition, high construction costs and the dramatic curtailment of tax exemption programs are likely to constrain new housing development.

There are some factors that could produce a more favorable future for housing construction than suggested by the low number of new housing permits. New York continues to see its population grow; we are continuing to produce new jobs at a pace that is better than most of major cities around the country. The pick-up in sales activity at the very high end of the market suggests that New York is a safe and attractive investment for high-income households. Also, the steady increase in rent for market rate units and the lack of inventory in the residential sales market should be a catalyst for new housing starts at a pace greater than what we have witnessed so far.

Decade

Total Housing Units

1960s

368,700

1970s

171,344

1980s

115,191

1990s

70,204

2000s

231,288

2010s*

78,315

* Decade Estimate based on annual average for 2010-2011

In other REBNY News:

The Department of Buildings is currently looking for volunteers from the industry to serve on the following boards:

These boards review issues from the development industry and provide either counsel to the Department of Buildings or make direct determinations regarding active projects and personnel in the City. Time commitments vary by board, but we encourage our members to apply if interested, as participation from the Owner/Developer community is essential for ensuring balanced decisions.

Applications must be submitted to the Department of Buildings by October 15, 2012. For more information, please contact Shannon Fales at sfales@rebny.com or visit www.rebny.com

Residential real estate’s biggest event of the year will also be this season’s most fashionable at The Real Estate Board of New York’s 24th Annual Residential Deal of the Year Awards and Charity Gala on Thursday, Oct. 25, 2012 at the Metropolitan Pavilion.

The high-fashion theme of the event will honor the most notable residential sales and rental deals, as well as two industry professionals with TheHenry Forster Award for lifetime achievement and The Rookie Salesperson of the Year Award.

The Gala will also feature the designs of Cesar Galindo who will present his 2013 fashions in a special presentation for guests. There will also be a raffle with prizes from top-name designer. Proceeds from the raffle and the event fund will benefit the REBNY Residential Member in Need Fund, which gives financial grants to REBNY members facing hardship because of a physical illness or family crisis.

Tickets are $425 for individuals and $400 for groups of 10 or more. For more information, contact Jeanne Oliver-Taylor at jtaylor@rebny.com.

John Banks, REBNY President
Mr. Banks authors REBNY Watch, this weekly column highlighting timely topics in real estate. It is published in the print version of Real Estate Weekly.